Two global businesses in the financial services arena signaled at an investor conference in New York Wednesday that even though the broad financial advice industry is currently preoccupied with inflation, a falling stock market and the war in Ukraine, there's still plenty of room for large firms to make inroads with financial advisers and their retail clients.
Blackstone Inc. has a "huge" opportunity with retail investors and firms that work with them, said Stephen Schwarzman, chairman, CEO and co-founder of Blackstone, while Morgan Stanley, as it works to integrate and digest its recent round of acquisitions, is keeping an open mind about further potential deals, said Ted Pick, co-president, head of institutional securities and co-head of corporate strategy.
Both spoke Wednesday at the Bernstein Strategic Decisions Conference in New York. Both Schwarzman and Pick echoed comments from their companies in the recent past, but it was noteworthy that both sounded as if they were sticking to their strategic guns despite the recent market turmoil.
For years, large Wall Street firms like Blackstone, the world's largest private equity manager, ignored the nontraded alternative asset industry sold by financial advisers, but that’s no longer true. According to investment bank Robert A. Stanger & Co. Inc., during January, Blackstone raised $4.2 billion in the alternative investment space, including its Blackstone Real Estate Income Trust with $2.4 billion and its business development company, Blackstone Private Credit Fund, with $1.7 billion.
Schwarzman said the retail market was "exciting" for Blackstone. "Now, as the environment becomes more difficult for money management generally, we’re finding enormous receptivity to what we do — not only from customers but from the management of those firms because they want customers" to get the returns generated by the Blackstone products, he said.
“If you think we’re done, that’s the wrong thought," he said, adding later that retail investors and financial advisers could be a “huge” area of growth for Blackstone, which manages $915 billion in assets.
Just last month, Morgan Stanley CEO James Gorman said during a conference call to discuss the company's earnings that it would continue to focus on its retirement platform and also widen its gaze to the overseas wealth management market. With close to 16,000 financial advisers, Morgan Stanley has dealmaking savvy and experience, with two recent mega deals for ETrade and Eaton Vance under its belt.
"That is our focus, making sure we get the best of both the ETrade and Eaton Vance cultures and then the Morgan Stanley culture on top of that and make sure that they are winners," Pick said Wednesday. "There are asset management and wealth tuck-in acquisitions that could potentially be made as we grow both of those businesses. I think they will be very project-specific, and we'll have to fit in well with what we're doing without moving the perimeter too much."
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